Republican Sen. Dick Anderson, who represents the coastal 5th District, listens to the proceedings in the Oregon Legislature on Feb. 12, 2024. (Jordan Gale/Oregon Capital Chronicle)
A Republican state senator who represents part of the Oregon coast has submitted a plan to exclude state taxes on tips.
Sen. Dick Anderson of Lincoln City said in a news release last week his “No Tax on Tips” proposal is designed to offer tax relief to people working in the service industry who are increasingly squeezed by rising inflation and “poor economic policies.”
“With high costs crushing Oregon workers, it’s more important than ever to support policies that put money back in the pockets of those who need it most,” Anderson said in a release. “Service industry employees rely on tips as a significant part of their income, and taxing these earnings only exacerbates the financial strain they face..”
Under Oregon law, employers must staff at least the minimum wage, regardless of whether they receive tips or not. Many other states allow tips to be counted as wages.
His proposal follows calls by former President Donald Trump in his Republican presidential bid to exclude taxes on tips. Under his plan, tips collected by restaurant workers, barbers, caddies, movers, drivers and others would not be taxed on their tips. The Democratic nominee, Vice President Kamala Harris, has a plan as well that would exclude taxes on tips for hospitality and service workers. It’s unclear what Anderson is proposing. He did not respond to a request for more information and did not release his proposal. Legislative staff said it will remain confidential until it’s formally filed.
In his release, Anderson said the proposal stems from his recent town halls in the 5th Senate District, which runs along the central coast and is one of the state’s most competitive. He said service workers, including waitstaff, bartenders and others who receive tips consider them to be a crucial part of their earnings. But taxes on them reduce their take-home pay, adding to their financial pressures, he said.
“I recently toured my entire district with over 20 town halls and I heard loud and clear that Oregonians are struggling to make ends meet in today’s economic climate,” Anderson said. “This bill is a direct response to those concerns and a step toward easing the burden on our service workers. I’m committed to working with my colleagues in the Legislature to ensure this bill passes.”
It’s unclear what impact his proposal would have on state revenues or whether he could get it passed. Rep. Nancy Nathanson and Sen. Mark Meek, both Democrats and respective chairs of the House Committee on Revenue and Senate Committee on Finance and Revenue, said in a statement that they will work to lower costs for Oregonians in the upcoming session. But they said much depends on the details.
“As with all policies, the devil is in the details. We are committed to advancing policies that support hardworking Oregonians and uplift the middle class,” they said. “We are concerned about the unintended consequences of a broad policy, including some of what is being discussed at the federal level. For example, how do you define a tip versus wages, and who does this apply to?”
Lawmakers have until Dec. 13 to file bills for the next session, which starts Jan. 21.
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